Yes, you will likely have no gain. Be sure to include any selling expenses because you may actually have a small loss. The cost basis for inherited property is the fair market value (FMV) on the date of death.
Follow the steps below to report your sale (this answer assumes you did not use the property for personal purposes prior to the sale).
Your cost basis is the fair market value on the date of death of the decedent, plus the capital improvements (not repairs but improvements that are capital in nature). The expenses of sale will reduce any gain or increase any loss as well. This is entered as the sale of investment property and can be entered as follows.
- Open or continue your return (you can choose the Search box and type 'sale of second home' then use the Jump to link to enter your inherited sale) or follow the menu.
- Under Wages & Income scroll to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
- Answer Yes on the Did you sell any stocks, mutual funds, bonds, or other investments in 2021? screen
- If you land on the Your investment sales summary screen, select Add More Sales
- On the OK, let's start with one investment type screen, select Other, then Continue
- On the Tell us more about this sale screen, enter the name of the person or institution that brokered the sale
- On the next screen, select Other (choose this also for inherited homes) then select I inherited it under How did you receive this investment? (For TurboTax Desktop you can enter a description of 'Inherited Home' and long term holding period.
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